The King’s Speech, delivered to both Houses of Parliament, has confirmed the introduction of the Enhancing Financial Services Bill, aimed at modernising consumer protections and reducing the administrative burden on firms.
Briefing documents from the speech said global competition had led to the UK financial services sector experiencing slower growth and productivity gains as well as higher costs.
“We want Britain to be more competitive globally and to harness the UK’s global leadership in financial services, so it’s better able to support UK businesses and consumers,” the documents outlined.
The new bill will deliver parts of the Leeds Reforms set out by the Chancellor in 2025, enabling the sector to grow and to lend more to businesses, and make consumer protections fit for the digital age.
The Government said changes to the Financial Ombudsman Service will modernise consumer protections and ensure redress arrangements reflect today’s markets and maintain confidence.
“Reforms to the Financial Ombudsman Service will increase consistency and clarity of decision-making, helping people resolve disputes more quickly and with greater certainty,” the briefing document said.
The announcement was welcomed by Charles Herbert, partner at Spencer West LLP.
“Reform to the Financial Ombudsman Service, where there has been criticism of the consistency, pace and clarity of decision-making, is much needed. The Ombudsman continues to provide a valuable service, particularly in sparing consumers, regulated firms and the court system from volume litigation and its associated cost.
“There remain valid concerns moving from the Ombudsman’s “fair and reasonable” test to a position where the Ombudsman must find in a firm’s favour where it has complied with FCA requirements might have unintended consequence, particularly pushing more consumers to litigation without initial reference to the Financial Ombudsman Service.”
Furthermore, the bill will consolidate the regulatory framework and reduce fragmentation of regulators. By streamlining the regulatory architecture and consolidating the Payment Systems Regulator within the Financial Conduct Authority, the Government said firms will deal with fewer overlapping regulators, providing clearer accountability and faster decision-making.
The bill also plans to reduce the overall burden of the Senior Managers and Certification Regime by 50% with a focus on accountability of the most senior figures in financial services.
Additionally, the Government said it will support lending and investment, including by updating the statutory framework underpinning the ring-fencing regime, which requires major banks to separate their UK retail banking services from investment banking activities.
The reforms will unlock more finance for UK businesses and improved competition in Small and Medium-Sized enterprises’ lending will help small businesses access finance.
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